(This archived guidance relates to HMRC discretionary
practice before the 6th April 2006. For current guidance on
Registered Pension Schemes see the Registered Pension Schemes
Manual)
A pension debit is taken into account for Revenue limits
purposes on the basis of a hypothetical deferred pension equivalent
of the pension debit, or “negative deferred pension”.
How the pension equivalent of the pension debit is calculated at
the employee’s normal retirement date is explained in
PSI6.5.95 for defined benefit
schemes and
PSI6.5.96 for money purchase
schemes. A feature of the calculation is that the deferred pension
equivalent of the pension debit established at the date of divorce
is revalued to normal retirement date by reference to the Statutory
Revaluation requirements under Social Security legislation that are
applicable to deferred defined benefits generally (see
PSI6.5.97). Where an employee
retires before normal retirement date, benefits come into payment
earlier than expected. The pension debit also needs to be taken
into account on the basis of a deferred pension equivalent revalued
to the date of early retirement. The revaluation requirements are
set out in
PSI10.1.34 and they apply to the
calculation of the pension debit in relation to the maximum limits
for both pension and lump sum benefits.
